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Court of Appeals
SECOND DIVISION
SYLLABUS
the trial court abstained from taking jurisdiction solely on the basis of the
pleadings filed by private respondents in connection with the motion to
dismiss. It failed to consider that one of the plaintiffs (PHILSEC) is a domestic
corporation and one of the defendants (Ventura Ducat) is a Filipino, and that it
was the extinguishment of the latter's debt which was the object of the
transaction under litigation. The trial court arbitrarily dismissed the case even
after finding that Ducat was not a party in the U.S. case.
3. ID.; ID.; SERVICE OF SUMMON; WHEN MAY BE EFFECTED.
— It was error we think for the Court of Appeals and the trial court to hold that
jurisdiction over 1488, Inc. and Daic could not be obtained because this is an
action in personam and summons were served by extraterritorial service. Rule
14, Sec. 17 on extraterritorial service provides that service of summons on a
non-resident defendant may be effected out of the Philippines by leave of
Court where, among others, "the property of the defendant has been attached
within the Philippines." It is not disputed that the properties, real and personal,
of the private respondents had been attached prior to service of summons
under the Order of the trial court dated April 20, 1987. ICaDHT
DECISION
MENDOZA, J : p
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of US$1,700,000.00 and to pay damages. On April 20, 1987, the trial court
issued a writ of preliminary attachment against the real and personal
properties of private respondents. 2
Private respondent Ducat moved to dismiss Civil Case No. 16563 on
the grounds of (1) litis pendentia, vis-a-vis Civil Action No. H-86-440 filed by
1488, Inc. and Daic in the U.S., (2) forum non conveniens, and (3) failure of
petitioners PHILSEC and BPI-IFL to state a cause of action. Ducat contended
that the alleged overpricing of the property prejudiced only petitioner
ATHONA, as buyer, but not PHILSEC and BPI-IFL which were not parties to
the sale and whose only participation was to extend financial accommodation
to ATHONA under a separate loan agreement. On the other hand, private
respondents 1488, Inc. and its president Daic filed a joint "Special Appearance
and Qualified Motion to Dismiss," contending that the action being in
personam, extraterritorial service of summons by publication was ineffectual
and did not vest the court with jurisdiction over 1488, Inc., which is a non-
resident foreign corporation, and Daic, who is a non-resident alien.
On January 26, 1988, the trial court granted Ducat's motion to dismiss,
stating that "the evidentiary requirements of the controversy may be more
suitably tried before the forum of the litis pendentia in the U.S., under the
principle in private international law of forum non conveniens," even as it
noted that Ducat was not a party in the U.S. case.
A separate hearing was held with regard to 1488, Inc. and Daic's motion
to dismiss. On March 9, 1988, the trial court 3 granted the motion to dismiss
filed by 1488, Inc. and Daic on the ground of litis pendentia considering that
the "main factual element" of the cause of action in this case which is
the validity of the sale of real property in the United States between
defendant 1488 and plaintiff ATHONA is the subject matter of the
pending case in the United States District Court which, under the
doctrine of forum non conveniens, is the better (if not exclusive)
forum to litigate matters needed to determine the assessment and/or
fluctuations of the fair market value of real estate situated in Houston,
Texas, U.S.A. from the date of the transaction in 1983 up to the
present and verily, . . . (emphasis by trial court)
The trial court also held itself without jurisdiction over 1488, Inc. and
Daic because they were non-residents and the action was not an action in rem
or quasi in rem, so that extraterritorial service of summons was ineffective.
The trial court subsequently lifted the writ of attachment it had earlier issued
against the shares of stocks of 1488, Inc. and Daic.
Petitioners appealed to the Court of Appeals, arguing that the trial court
erred in applying the principle of litis pendentia and forum non conveniens and
in ruling that it had no jurisdiction over the defendants, despite the previous
attachment of shares of stocks belonging to 1488, Inc. and Daic.
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a claim as in this case, but it may be opposed by the defendant if the foreign
judgment is sought to be enforced against him in a separate proceeding. This
is plainly untenable. It has been held therefore that:
[A] foreign judgment may not be enforced if it is not recognized
in the jurisdiction where affirmative relief is being sought. Hence, in
the interest of justice, the complaint should be considered as a
petition for the recognition of the Hongkong judgment under Section
50 (b), Rule 39 of the Rules of Court in order that the defendant,
private respondent herein, may present evidence of lack of
jurisdiction, notice, collusion, fraud or clear mistake of fact and law, if
applicable. 14
Accordingly, to insure the orderly administration of justice, this case and
Civil Case No. 92-1070 should be consolidated. 15 After all, the two have been
filed in the Regional Trial Court of Makati, albeit in different salas, this case
being assigned to Branch 56 (Judge Fernando V. Gorospe), while Civil Case
No. 92-1070 is pending in Branch 134 of Judge Ignacio Capulong. In such
proceedings, petitioners should have the burden of impeaching the foreign
judgment and only in the event they succeed in doing so may they proceed
with their action against private respondents.
Second. Nor is the trial court's refusal to take cognizance of the case
justifiable under the principle of forum non conveniens. First, a motion to
dismiss is limited to the grounds under Rule 16, §1, which does not include
forum non conveniens. 16 The propriety of dismissing a case based on this
principle requires a factual determination, hence, it is more properly
considered a matter of defense. Second, while it is within the discretion of the
trial court to abstain from assuming jurisdiction on this ground, it should do so
only after "vital facts are established, to determine whether special
circumstances" require the court's desistance. 17
In this case, the trial court abstained from taking jurisdiction solely on
the basis of the pleadings filed by private respondents in connection with the
motion to dismiss. It failed to consider that one of the plaintiffs (PHILSEC) is a
domestic corporation and one of the defendants (Ventura Ducat) is a Filipino,
and that it was the extinguishment of the latter's debt which was the object of
the transaction under litigation. The trial court arbitrarily dismissed the case
even after finding that Ducat was not a party in the U.S. case.
Third. It was error we think for the Court of Appeals and the trial court to
hold that jurisdiction over 1488, Inc. and Daic could not be obtained because
this is an action in personam and summons were served by extraterritorial
service. Rule 14, §17 on extraterritorial service provides that service of
summons on a non-resident defendant may be effected out of the Philippines
by leave of Court where, among others, "the property of the defendant has
been attached within the Philippines." 1 8 It is not disputed that the properties,
real and personal, of the private respondents had been attached prior to
service of summons under the Order of the trial court dated April 20, 1987. 19
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Footnotes
1. Now BPI-International Finance Ltd. (hereafter called BPI-IFL).
2. Records, p. 58.
3. Per Judge Fernando V. Gorospe, Jr.
4. Per Associate Justice Conselo Ynares-Santiago with Associate Justice
Ricardo L. Pronove, Jr. and Nicolas P. Lapeña, Jr., concurring.
5. C.A. Rollo, pp. 205-206.
6. Rollo, p. 303.
7. Philippine International Shipping Corp. v. Court of Appeals, 172 SCRA
810 (1989); Nagarmull v. Binalbagan-Isabela Sugar Co., Inc., 33 SCRA 46
(1970); General Corporation of the Philippines v. Union Insurance Society of
Canton Ltd., G.R. No. L-2303, Dec. 29, 1951 (unreported); Boudard v. Tait,
67 Phil. 170 (1939).
8. Hang Lung Bank v. Saulog, 201 SCRA 137 (1991).
9. Boudard v. Tait, 67 Phil. 170.
10. G.R. No. L-2303, Dec. 29, 1951.
11. Id., p. 6.
12. 172 SCRA 810.
13. C.A. Decision, p. 6; Rollo, p. 52.
14. Hang Lung Bank v. Saulog, 201 SCRA 137.
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